An unauthorized program granted steeply discounted room rates to some Orange County employees, contractors and their friends at the publicly owned Dana Point Marina Inn, potentially costing the county tens of thousands of dollars over the past several years, a county audit has found.

The audit released Wednesday revealed that some public employees – including top managers who oversaw the hotel’s contracts with the county – and their friends and relatives were offered room rates for as low as $35 per night. Rates at the inn, located in the heart of Dana Point’s picturesque harbor, typically range from $100 to $350 per night.

The unauthorized discount program was used at least 988 times by numerous people over the past six years, costing the county as much as $62,000 in revenue, the audit found. Among those who made use of the discount were employees of the hotel, the county and the city of Dana Point, as well as contractors and harbor lessees.

Two of the people who benefited were unnamed “key managers” at Dana Point Harbor who had oversight of the contract for the Great Western Hotels Corp., the company that manages the hotel for the county, according to the audit. Those managers were also responsible for approving the Dana Point Marina Inn’s annual budget and monitoring its performance.

“It’s a very narrow benefit, but it extends to people who are overseeing the (hotel) contract,” said Auditor-Controller Eric Woolery, who released the audit.

OC Dana Point Harbor Director Brad Gross was in charge of overseeing the hotel contract during the time when the audit found that employees had received discounted room rates, according to county documents. In 2014, Gross used his power as director to extend Great Western’s contract through 2019.

It was not immediately clear whether Gross is one of the “key managers” described in the audit as having benefited from the discount. On Wednesday, a phone call to his direct office line prompted a voice mail in which Gross announced he would retire today after nearly nine years as director. He did not return calls for comment.

The audit recommends that county counsel review the discount arrangements to determine whether they amount to violations of county or state law. One statute prevents government employees from overseeing contracts in which they have a financial interest; another requires officials to disclose gifts valued at $50 or more.

In the audit, OC Dana Point Harbor officials responded that they would work with county lawyers to “determine if any follow-up action is necessary.”

County spokeswoman Jean Pasco said all employee discount programs need to be approved by county supervisors, but the Dana Point hotel benefits were unknown to county supervisors and lawyers, she said. When asked whether county employees might be disciplined for their involvement in the discount program, Pasco said she does not comment on personnel matters.

Great Western officials did not return calls for comment.

Despite being unauthorized, the hotel discount program dated back to 2003, according to the audit, and had rules that were passed down among hotel and county employees.

Some of those rules were written in a 2014 memo quoted in the audit. The discount was supposed to be for friends and family only; employees were not to use it for their own getaways; and employees weren’t supposed to stay during the busy summer months.

But even those guidelines were broken.

In 2013, a person described as a “key manager” for the City of Dana Point stayed in a suite for 147 consecutive nights – an arrangement that the audit says had been approved by Dana Point Harbor’s county management, as evidenced by comments in the hotel’s reservation system.

That was one of six instances in which a discounted guest stayed for more than 10 days, including visits from a harbor restaurant owner and several friends of hotel managers and employees.

The audit acknowledges that the discount program could be beneficial if it were authorized and run correctly by providing employees a benefit while creating an extra revenue stream by renting out otherwise vacant rooms.

Orange County owns Dana Point Harbor but leases out large portions, which are operated by private contractors. Great Western built the Marina Inn in 1971 as part of a lease agreement with the county and has operated it ever since.

The revenue for the hotel goes directly to the county, which uses the money to reimburse operating expenses, pay Great Western a management fee and pocket the rest as revenue. From March 2014 to March 2015, the hotel brought in $3.2 million, the county reimbursed $2.1 million for operations and Great Western was paid $146,000, leaving around $950,000 for the county.

Pasco said the hotel discount has been discontinued, but the audit suggests that there may be other similar unauthorized dealings in Dana Point Harbor. Pasco said the county was unaware of any such dealings.

Wednesday’s audit was the first of three that Woolery has planned on the county’s Dana Point Harbor operations.

The county is searching for a private developer to renovate and operate portions of the harbor, including the Marina Inn.

Jordan Graham covers congressional politics and county government for the Orange County Register. He began his career reporting freelance civic and watchdog journalism in his hometown of Chicago before moving westward in 2013. He has previously covered Irvine, the San Fernando Valley and Costa Mesa for the Register. He is a graduate of University of Illinois and Northwestern University. Please email or call him with news tips.